TCS Daily

WTO Rerailed?

By Alan Oxley - August 3, 2004 12:00 AM

Trade Ministers love to announce big results. "Half a trillion dollars of world trade can be freed" declared Supachai, the former Trade Thai Trade Minister and Director General of the WTO, when agreement was announced last week in Geneva that the logjam in the WTO trade negotiations had been cleared. But it is business which delivers those results, not government. The job of trade officials is to get the process right so trade is possible. They have served business poorly in recent times.

The Uruguay Round of global trade negotiations began with great fanfare in 1986. The big deal was that at long last, global trade in agriculture was to be freed. Eighteen years later, we are still waiting for trade and agriculture officials to negotiate real cuts.

The Uruguay Round finally finished in 1994. It set out a modest program of cuts in farm protection. Negotiators knew that and mandated that new negotiations on further cuts should start in 1999. Following the collapse at the WTO conference in Seattle in 1999, they were finally launched at Doha two years later, to stall again at Cancun last November. The real work is still yet to begin. In Geneva last week, officials agreed only on how to negotiate those cuts, not what the cuts would be.

Reducing protection of world trade in agriculture is the main job before the WTO. Agriculture accounts for just over nine percent of world trade. Barriers and subsidies to the tune of US $200 billion a year restrict trade in food, raise domestic prices and lower world prices.

Just how long should all of this take? Of course, it is complicated and difficult. Elected representatives in Europe and North America have to face down farmers who have been living on government handouts for years. That is not easy. But trade officials have not helped themselves in this effort.

Agriculture officials were ready to agree to start to talk in 1999. The Seattle conference could have endorsed that. Popular mythology is that the anti-globalization protests stopped the meeting. The truth is that agreement to launch a trade round was never possible. Trade officials had spent months brawling in Geneva over who should be Director General instead of preparing for Seattle. Former New Zealand Prime Minister Mike Moore was appointed head of the WTO barely weeks before the Seattle meeting. Trade officials had not prepared properly on the myriad of other issues. Seattle was doomed to fail.

United States Trade Representative Robert Zoellick forged the successful agreement at Doha two years later to finally start the new negotiations, working with Moore and Pascal Lamy, the EU Commissioner. But there was another blooper. They set up the mandate to negotiate on agriculture the wrong way round. They required governments to set out first how much they were willing to cut protection of agriculture, then to decide how the cuts would be made. Negotiations just don't work that way. The price of the deal is the last thing settled, not the first.

Naturally, no-one offered up numbers for cuts to agriculture. Negotiations quietly stalled. Reordering the negotiating program was the priority task for Cancun. Once again agriculture ministers were ready to fix this, but the Mexican Trade Minister started negotiations on other issues, such as investment and the role of developing countries. They failed and the meeting stalled. Agriculture was never discussed. System failure again.

So how well did they do in Geneva? This time, they sorted out agriculture first. Other matters, such as how tariffs in industrial products would be cut, were left to be sorted later. That might be a problem. Developing countries increasingly believe, misadvised by anti-free trade NGOs like Oxfam and the World Wide Fund for Nature, that only rich countries should cut trade barriers. The EU and the US don't buy that.

The key issue now is the time available. Serious negotiations to cut protection of farming were never going to occur until administrations in Brussels and Washington were willing to face up to the need to take decisions to reduce domestic programs. If the Doha Round is to succeed, we need to see the new Administrations in the EU and Washington do this next year. This will be a mighty political challenge.

Trade Ministers evidently recognized this and extended the deadline for the Doha Round from January until November 2005. That was a good start. But can new administrations in Europe and America sort out how they will cut farm protection, then negotiate a global deal by the end of 2005? The odds are not good. Have WTO officials set the system up to stall again?


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